This is the time to remember what our maths teachers always said: that maths’ are important in life.
For your business life, numbers are the key indicators of whether you’re doing something right or wrong.
If you’re winning or losing money.
If your idea is brilliant or it needs a bit more digging into.
When building, growing and selling your eCommerce business, numbers will always play a significant role.
The numbers we’re referring to in this particular blog post are metrics. The 3 key metrics you should never stop looking at.
Metrics are key indicators to your business because they help quantify the performance of your products, your website, and your marketing efforts.
Which, in turn, helps you understand if your business is actually growing or coming to a stall.
There are, of course, multiple metrics to look at, especially given that different eCommerce businesses will have different KPI’s – and that, too, will affect the priority of metrics.
But, as with everything, there are always those 3 essential ones that fit whichever line of business.
And those are the ones we’ll talk about in this post.
The 3 key metrics you should never stop looking at
Before we go into the actual metrics, do bear in mind that you should not just look at these ones.
As we’ve mentioned before, these 3 will be key to whichever eCommerce business you own, but other metrics will be important as well.
Metrics like your bounce rate, your average profit margin, the revenue per source, etc.
1. Average CAC (Customer Acquisition Cost)
Your marketing efforts are an ongoing investment in your online business.
So you need to be aware of the average customer acquisition cost (CAC) to ensure that your budget is, in fact, attracting new clients to your business.
The lower the Average CAC, the better.
It means your overall marketing strategy is working.
It’s important to always have a marketing strategy in place to guarantee that that new customer will remain loyal to your brand.
This will help you lower your Average CAC (since they’ll be a returning customer) and improve your customer lifetime value.
2. CLV (Customer Lifetime Value)
Simple math between how much you paid to get a new customer and how much money the customer spent on your eCommerce business, since they first met you.
This means taking the sum of all purchases made by that particular customer and you can see where the money is coming from.
Is it a loyalty programme? A discount you’re awarding customers with.
This is where you can try and increase the CLV in the future by focusing on what’s working best.
The CLV is one of the most important key metrics because, combined with the Average CAC, you will instantly know if you’re spending too much to bring in new clients.
If your average CAC is higher than the CLV, you need to sit down with your team and decide on a marketing retention strategy.CLV is solely dependent on you, the quality of your products, your Customer Service and general marketing efforts.
3. Cart Abandonment Rate
Why are 90% of people leaving the website without paying for their cart?
Are the shipping costs one of the reasons? Are reviews missing?
Is SSL or secured payment missing?
What’s the strategy to remind them that their purchase was not yet completed?
And how are you ensuring customers that they can trust your business?
Analysing Cart Abandonment Rates on Google Analytics, for example, will give you an overall view of what people are going through to try and complete their purchase.
If most customers who leave the cart follow the same path, then what may be happening along the way?
If one page or two is slower to load, that can be trouble.
If some pages are not mobile optimized, that is a big problem too.
Your cart abandonment rate is one of the key metrics you should never stop looking at.
Sure, you shouldn’t obsess over it and check it every hour! But be on top of it.
Never let these out of your sight
You wouldn’t light a fire on a 50€ bill. Right?
The idea of literally burning money is not that great, we’re sure.
If that’s the case, why would you willingly choose to ignore 3 key metrics that will guarantee your business stays profitable?
These are the metrics you should never stop looking at or asking about when meeting with your marketing team.
Have your team include them on a dashboard so you quickly and easily read them everyday.
As for the other metrics?
Have your marketing team let you in on those. That’s why you hired them.
Your time is precious and you shouldn’t look at every single metric you can find.
You need to focus on the important ones, read and understand them, and act on them when necessary.